That section on Cydia actually hasn't been updated in a while, hence why it makes no mention of 4.x.

iOS 4.1 has not been publicly jailbroken yet, so don't update just yet (unless you want to lose your jailbreak)! Now that you're done with Star/Jailbreakme, you should close up the exploit that it used (if left as-is, a malicious web site can run code to steal your information). To get the fix, search for "PDF Patch" in Cydia, and install it.

Just decide what it is you want. I suggest installing CyDelete, Winterboard, iFile, Safari Download Manager and Yourtube 2 (if you don't want to pay there are some swashbuckling repositories for Cydia/Rock you can add but I can't really mention)
I also think you should install Rock. Its a Cydia alternative/replacement which tends to be quicker to update its catalogue but a little buggier at installing/uninstalling things. As well as this it also keeps a backup of all your installed packages/repositories so that if you restore and re-jailbreak you can easily redownload and reinstall all your packages.

If you have an iPhone3G you should also download backgrounder which will let you activate multitasking and tweak it so its not as demanding on RAM (set it so that only apps that actually run in the background e.g. Skype use it and ones that just take up space e.g. Games don't). I'm not sure exactly how to get wallpapers enabled natively in iOS but I know its a simple plist edit which you'll probably find all over the place in the Cydia store.